Debt Relief for Poor Countries: A Comparative Political View
The HIPCs or Highly Indebted Poor Countries of the world do not need more hand outs. They need reforms and progressive, self- motivated change. According to James Cross of , “âÂ?¦the absence of well- developed, financial markets would structurally sabotage growth and development.” To give these countries debt relief is to give them more debt to squander and misappropriate. Fundamentally, the reason that HIPCs may never see a debt free day is because they never learned how to properly appropriate funds, manage monies and budget. Take for example the country of Kenya. Kenya is one of the poorest, most indebted countries on the African continent. They also house one of the most corrupt governments in Africa. As first glance, one could argue that their history or corruption should be a reason that debt relief for them is a good idea. However, this logic is wrong. There is no proof that Kenya will have an end to their corrupt dealings- after all, Kenya still keeps Eldoret International Airport’s doors open, despite it limited use and even more limited economic generation for Kenya. Also, there is nothing promising that Kenya will be helped from debt relief. All current numbers have shown that even with debt relief, HIPCs debt increases because of new borrowing with the same money management ideas.
Also, debt relief does not come without a contingent. What this means is that HIPCs should not and cannot expect to simply be handed over tons and tons of cash or aid, without some stipulation as to how this aid and or cash, is to be spent and utilized. The idea that debt relief should come with no strings and/ or instructions to HIPCs is ludicrous. There are two essential problems with this logic. First and foremost, even the United States, a member of the G7 pays dues on monies that is borrows and utilizes. When the US government lends or gives money to individuals in this country, those individuals must pay for the use of those monies by following a strict set of rules or guidelines. If American citizens receive this treatment, why wouldn’t a foreign nation? Then too, what does the United States have to gain from simply handing out money with nothing in return? It has already been proven that HIPCs have a hard time with paying back their debts. Thus, by placing stipulations on the monies given, the US will at the very least, have some of their needs met by building special stipulations as to the allocation, and usage of said monies. Still, even this may be a long shot idea. What is more tangible and viable is the notion that debt relief often is misused by even those who are attempting to fight most for it.
I have heard the stories that debt relief strategies are to help HIPCs to offer aid to the poor within their countries; however, this is a tall order. For one, as William Easterly asserts, agencies may assert that debt relief funding can and is used to help the poor people of poor countries but how do we know this for sure. Far too often, poor countries have corrupt governments, and corrupt governments play with numbers and figures to tell a story that they wish it to tell. Additionally, some countries never spend anything on education and health care, thus to say that debt relief has aided in getting governments to spend more on these things by 4 times more (as is stated by the International Monetary Fund Fact Book) will have little credibility if the original spending was zero or something equally ineffective. Then too, it should be noted that even this fight presents two logical errors.
The first error is that the use of debt relief funds for social welfare problems and programs is wrong in and of itself. Debt relief is meant to help get countries out of debt. How can this be if there is no new revenue being generated from spending on social programs? Likewise, even the IMF Fact Book states that minimal gains are seen as new loans are needed. While reducing overall debt is still the big picture in places like Ethiopia and Rwanda. In order for debt relief funds to be helpful and to truly do what those who are fighting for it, says that is will do, there must be a reduction in overall debt with a increase in or newly generated revenue. We have seen this not to be the case.
The second flaw in logic is that this relief cannot come in the way it is being argued for. Advocates for debt relief say it will give HIPCs free choice to decide how to finally help their countries come from poverty. However, free choice is a situational value; as those who are giving the money are still telling poor countries how to use, and I.E. “helping” them funnel money into social programs.
Another major concern is that this debt relief is not helping those countries who have made positive progress and could use some relief from poverty. Countries like those of Indonesia whom are still extremely poor and under- developed do not fit the criteria set to be an HIPC and receive debt relief. Yet, Rwanda, a country that does fit HIPC criteria but has not shown any positive change or move from corruption can and does receive some help but misuses. Even the IMF Fact Book states that this is a major problem with debt relief. The Fact Book states that many countries continue to be cut off from debt relief because they fail to show any real progress and change. However, they have received some funding- the world has wasted funding on them.
The best possible course of action for HIPCs is for them to develop a strategy and plan for the future. This plan should then be evaluated and scrutinized before any funding is allocated to them. Also, the whole method for defining HIPCs should be overhauled. Too often countries that would and could benefit from aid and relief are rejected; despite their ability to effectively utilize the help. The G7 needs to rethink these issues. They too deserve to get benefits from their continued help and lending. After all, babies grow up at some point. They learn to live and function on their own. Long term dependency is not a good policy outcome for any parties involved. HIPCs need a wake up call, they need to grow up, take off the band aides and learn to heal their own scars and wounds.
